Cutting through the clutter on the proposed $15 minimum wage hike

Pros of a potential $15 minimum wage

The pros are fairly obvious: more money for low-wage workers. But just how many workers will benefit, and how much they will benefit, is harder to grasp.

According to numerous sources, anywhere from 25 million to over 30 million low-wage workers will receive a financial boost if a national $15 minimum wage law were passed. In a report from MarketWatch, roughly 30% of the American workforce would be given a raise, while the Congressional Budget Office (CBO) claims that 27 million people would benefit from this legislation.

For many, this is not just a simple rise in income, but a lift from poverty. For some individuals, this payment could significantly increase their incomes, allowing them to support their families in a more comfortable, safe environment. Yes, many minimum-wage earners are young individuals with no dependents (high-school-age kitchen help, for example), but as business owners, we should also recognize that some low-wage workers are not only supporting themselves, but their families.

There is also an argument to be made that if the minimum wage were increased, the need for tax-supported services would decrease. If low-wage workers were paid more, there could be a reduced need for food stamps, Medicare, and marketplace subsidies. For example, the CBO report says that the legislation could decrease the need for child nutritional programs by $94 million dollars between 2021 and 2026, and the need would be decreased by $230 million between 2021 and 2031.

Cons of a potential $15 minimum wage

While proponents of a higher minimum wage have plenty to build their case, opponents have real concerns about this potential law’s impact on the job market and the economy as a whole.

 Mostly, there is a concern for lost jobs. Supporters of a $15 minimum wage claim millions of people see increased pay. But this assumes that everyone who has a job before a wage hike will have a job after. This is not always the case, at least according to opponents. 

 A report from CNBC builds a case, based on their own survey information, that one third of small businesses would have to lay people off if the minimum wage were to increase to $15 an hour.

In the report from the CBO that we mentioned above, potential downsides of the legislation were also addressed. According to their data, about 1.4 million jobs would be lost if the minimum wage were increased to $15 an hour.

Will it pass?

Whether or not a $15 minimum wage could make it into national law is still unknown. While there has been lots of talk about this issue, it seems that, at least for now, the chances of it passing are slim.

 Last month, an attempt by Democrats to raise the national minimum wage was placed in a COVID-relief bill. This bill was known as the Raise the Wage Act, and it was dropped in the Senate when it arrived.

Essentially, to become law any bill needs to pass through all of Congress, including the House of Representatives and the Senate. The House is currently controlled by Democrats who largely support a $15 minimum wage, while the Senate is split, with V.P. Kamala Harris providing the tie breaking vote. So if even one Democrat splits from the party line, it won’t pass. This narrow majority (technically the narrowest possible) came into play recently, as two Democrat Senators have ruled out voting for the legislation. 

This does not rule out a future $15 minimum wage. The two Senators appear to simply not want the $15 law in any legislation meant for COVID relief. There is a concern that implementing the law now, even if phased, would be harmful to economic recovery.

If it passed, how soon would it go into effect?

While the House and Senate debate, discuss, and deliberate, business owners want to know when, if at all, this will impact their businesses.

The truth is: no time soon. 

Even if the $15 minimum wage law were passed, it would be phased in, with staggered increases throughout the years. The latest proposals would have phased it in by 2025 or 2026.

So for the short term, business owners do not have to concern themselves with the economics of a $15 minimum wage. They should, however, create plans to stay active and engaged while keeping as many staff members as possible if a $15 minimum wage becomes a reality.

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